GeneDx (NASDAQ: WGS) is going to produce a three thousand three hundred - or thereabouts - percent raise at the market open this morning. Well, it will if everyone has their reporting of the ticker right. Sadly, there's nothing to do about this and no way that we can benefit from it. This isn't like one of those Chinese smallcap stocks suddenly emerging as a meme. This is a purely nominal change. It's a change in the numbers but not a change in the actual value that is.
Of course, what is happening here is a reverse stock split - a consolidation to Brits. If we change the number of shares in issue and leave everything else the same then the company should be worth the same amount - and therefore the share price will change. Not only will the company have the same market capitalisation, the value of any specific stockholding should be the same. At which point it all seems a bit of a waste of time, but there is good enough reason behind the practice
GeneDx stock price from NASDAQ
Stock markets are as subject to fashions and cultural beliefs as any other part of human life. One of them is that there's a “right” price range for a stock. Ranges are different across different markets - London seems to think £1 to £10, New York $10 to $100. This is why the American ADR of a London stock is so often 10 pieces - to get into that “right” price range in both markets. In New York this goes further. Under $1 is a penny stock which is clearly logically correct. But it also comes with implications of being a little dodgy, near criminal in fact. Implications only, think of Wolf of Wall Street. So, if the price goes below the minimum bid price of $1 for an extended period on either the NYSE or NASDAQ then the quotation can be lost. Rather an “Off to the OTC with you!” attitude. As that makes raising more capital more difficult, the lower liquidity also reduces stock value further, companies try to avoid this. The reverse stock split, which pushes the nominal stock price back up above that minimum $1.
Which is what is happening here today at GeneDx. There's a 33 for 1 reverse stock split. The price should therefore rise 3,300%. But that's all purely nominal. The real price change will be however much different from 3,300% the opening price is.